Why investors in new Scottish Government bonds may be banking on failure of SNP's independence dream

In a significant step, the Scottish Government plans to issue its first bonds in the next financial year, essentially providing ministers with a new way to borrow money (although thankfully not more money, as there’s a legal limit of £3.1 billion).

And in preparation for the arrival of ‘kilts’ – a play on the UK Government’s bonds, known as ‘gilts’ – the Scottish Government now has its own credit ratings, which turn out to be the same as the UK’s. Rating agency Moody’s explained Scotland had “demonstrated prudent fiscal management, consistently underspending its budget since 1999” and praised its “large and well-diversified economy”.

READ MORE: What are bonds and how do they work?

However, it added that Scottish independence “could exert downward pressure on the rating by introducing heightened uncertainty about the institutional framework and potentially raising financial stability risks”.

Of course, investors who take up the SNP’s offer may buy into nationalistic rhetoric about the new promised land. But they also might, just possibly, be banking on the failure of the SNP’s primary ambition.